Getting a grip on emotions: 1) Customer loyalty

This week I will be putting up three posts on the emotional element of superior service. I will be covering:
1) How creating an emotional connection can build customer loyalty
2) Where customer surveys can let you down
3) Why, paradoxically, customers don’t always come first

First, let’s look at how a positive emotional connection can build loyalty better than loyalty schemes.

In our definition of superior service, we use the simple definition that if, as a customer, you come away from a transaction with an organisation with a positive emotional connection then it’s superior, if you feel neutral it’s functional, if negative then mediocre or worse. This is simple but, on one level, somewhat problematic for the customer service provider because ’emotional connections’ seem a bit vague compared with other measures such as average revenue per customer, number of visits, number of complaints and so forth. These are not wrong measures – and in part 2 of this series we will see how they can best be used – but they can tend to take an organisation away from the core element of customer loyalty.

Let’s take it as read that you want to build loyalty in your customer base. After all it costs money to win new customers so it’s likely to be more economical to keep your current customers happy and loyal than to invest in acquiring or re-acquiring new ones. The problem, as described in a recent article in 1to1 Magazine – Loyalty at Risk – is that customers are continuously bombarded with marketing messages and it’s hard to get your message across, and to get it to stick. Our brains are conditioned to look for new things all the time so what might seem exciting one day seems old hat the next.

Organisations can up the pace of their communication to cut through the ‘marketing storm’ or find new ways to stimulate their customers. For example, Toptable, the restaurant review and booking site, keeps me coming back for the simple reason that I win points every time I book and review a restaurant. Eventually I get a free meal somewhere so as someone who likes eating out and pretending to be a restaurant critic this is a ‘something for nothing’ deal for me.

Other, broader-based, loyalty schemes such as Nectar appear attractive but are subject to game-playing where the relative benefits of different schemes and offers can be analysed in order to get the best deal. (For example see ‘Tricks to get the Best Deal’ on personal finance guru and breakfast TV regular Martin Lewis’ moneysavingexpert.com website.) From a customer perspective there is nothing wrong with this – if you put in the leg-work, you’ll get a better deal and save money – but from a service provider perspective it’s perhaps worth bearing in mind Lewis’s advice that ‘the golden rule is never choose where you shop due to loyalty schemes, yet shop somewhere with a scheme and always use it’.

So in world where customers have access to wider information to help them make choices, exploit loyalty points schemes and flit between providers with the best deal, an effective loyalty scheme is going to be increasingly difficult to maintain. Far better to focus on the customer’s emotional connection and this can be achieved by ensuring your brand stands for something that customers will connect with – Body Shop‘s eco-awareness is a good example of a brand that is also a cause – or, as this blog advocates, the emotional connection for customers.

To illustrate this point, imagine that you are walking down your local high street. There are three shops selling broadly similar goods. Shop A offers its regular customers a 4% discount on all prices (about the best deal you can currently get in the UK), shop B offers a 40% discount on one or two goods but is generally a little higher than average and shop C has no discounts and average prices but every time you go in the shop assistant seems genuinely pleased to see you and you often stop for a chat.

If what you wanted was one of the 40% discounted goods you would be daft not to go to shop B but, if not, you would most likely ignore its higher prices and go for A or C. You would perhaps expect me to suggest that the emotional connection on offer would always drive you to shop C. Not so, but the fact is that under some circumstances you may feel that the slight premium you pay to shop at C is borne out by the superior service you always receive. My main point is that shop C doesn’t have to bear the cost of discounting or of running a loyalty programme and therefore should – all other things being equal – be more profitable.

In future posts I will probe this issue further but for now I’ll close with the assertion that superior service will buy more loyalty than any loyalty scheme.